Promotion Of Micro And Small Enterprises In Tajikistan Mountains

Mar 9th, 2013 | By | Category: Advocacy, Agriculture, Biodiversity, Capacity Development, Ecosystem Functions, Environment, Financing, Food, Governance, Government Policies, Information and Communication, International Agencies, Land, Lessons, Migration, News, Population, Research, Resilience, Vulnerability, Water
MSDSP facilitates the promotion and development of micro and small enterprises, while remaining vigilant to not distort the market and impede existing enterprises.

MSDSP facilitates the promotion and development of micro and small enterprises, while remaining vigilant to not distort the market and impede existing enterprises.

AKF: At independence, Tajikistan faced a variety of rural development challenges precipitated by the collapse of the Soviet Union and the ensuing civil war from 1992 to 1997. The mountainous regions of the country were especially affected, as both events left these areas cut-off from previous supply routes and desperately short of food. The dependency that had developed during the Soviet era left people in a position where it was impossible to sustain themselves; the situation was particularly dire in the Gorno-Badakhshan Autonomous Oblast (GBAO).

Initial efforts made by the Aga Khan Foundation (AKF) in the GBAO region consisted primarily of humanitarian relief; however, there was also a great need for increasing the self-sufficiency of people in the districts through increasing local food production and reforming the Soviet collective farms. In order to achieve these changes, agricultural reforms focusing on private ownership of land were promoted along with efforts to increase the amount of arable land. These activities were further complemented with the provision of technical advice, credit services and agricultural inputs to private farmers.

These activities were carried out by the Pamir Relief and Development Programme, which was founded by AKF in 1993. The name Mountain Societies Development Support Programme (MSDSP) was adopted in 1997 when the programme began operating in the Rasht Valley, which is a set of seven adjacent mountainous districts with similar geographic conditions to those in GBAO. The name change also marked a shift in focus from relief to development. Since then, the programme has continued to expand its coverage and currently works in three regions: GBAO, the Rasht Valley and the eastern mountainous districts of the Khatlon region.

MSDSP’s current efforts include developing a strong civil society at the community level, which is able to address the concerns of citizens in a structured manner. This also includes federating communities in order to increase their ability to plan and carry out development projects while seeking increased support from government. MSDSP is also working with government at the local level to implement programmes that help the people of Tajikistan.

It has also modified its agricultural activities to create more sustainable self-driven systems to ensure the country’s food security and farmers’ livelihoods. The regions where the programme is active have diverse infrastructure needs, from the repair of schools and clinics to the construction of bridges and roads. Recently, MSDSP has begun to increase its focus on business development in rural areas in order to promote the development of private sector activities.

Civil Society

MSDSP supports a network of more than 1,200 independent Village Organisations (VO) and 45 federations
of VOs called Social Unions for the Development of Village Organisations (SUDVO). VOs and SUDVOs play a vital role in identifying the needs of communities and prioritising the projects that MSDSP implements. MSDSP provides support to VO and SUDVO development through various institutional development exercises, including development planning, establishing savings funds, and training aimed at increasing management capacity and leadership skills.

As part of MSDSP’s approach to developing communities, mobilising local resources is very important. The money raised allows communities to initiate and run development projects on their own while creating a sense of ownership in the projects. This money can also be used by the community for other needs such as training, repair and maintenance of existing community projects or for emergencies. At the end of 2006 the total amount available in village funds was over 2,800,000 Tajik somoni (US$ 810,000, approximately). MSDSP is also building the capacity of local governments in the programme areas. Since 2004, MSDSP has engaged the local authorities in a drive towards establishing a dynamic approach to local governance, where input from the communities is sought in order to complement government programming. In order to achieve this, MSDSP has developed initiatives where civil society and local government come together to inform each other and coordinate their activities. MSDSP has also provided training for government staff at the sub-district and district level in order to develop their capacity to better plan and manage resources.

Enterprise Development

MSDSP facilitates the promotion and development of micro and small enterprises, while remaining vigilant to not distort the market and impede existing enterprises. The programme supports both new entrepreneurs and existing businesses.  Most enterprises supported by MSDSP receive assistance through Business Development Centres. These centres are designed to accelerate the growth and ensure success of nascent companies through an array of business support services.   The centres offer two types of assistance to new businesses: the first is an enabling environment for the business and the second is a training programme for the entrepreneur. Each business based in the centre is provided with space and utilities. Entrepreneurs also take part in a mentoring and training programme that includes courses on a variety of topics, such as business management and compliance with government regulations. These courses are accessible to both onsite businesses located in the Business Development Centre and other off-site entrepreneurs in the communities.

MSDSP, in partnership with AKF (Afghanistan), is promoting cross-border cooperation between Tajikistan and Afghanistan in order to create socio-economic linkages between the people living in the border areas of the two countries. Improving cross-border perceptions and trade can be a powerful vehicle to enhance relations between Tajikistan and Afghanistan. This is particularly beneficial to south-central Tajikistan and northern Afghanistan, as the populations on each side are isolated from major commercial centres in their respective countries.

Infrastructure for Livelihoods

In a rugged yet ecologically fragile country with such dispersed populations, many of whom live in very remote areas, infrastructure plays a significant role in the lives of people. MSDSP’s infrastructure programme is an important component that complements much of its programming and has made a significant impact on people’s lives at the grassroots level. Infrastructure does not only improve access to essential services like education and health care, but also access to markets and economic opportunities. Presently, MSDSP focuses on two categories of infrastructure: irrigation and social infrastructure. Irrigation infrastructure involves facilitating an increase in agricultural production and productivity. Understandably, irrigation infrastructure is very important as it contributes to Tajikistan’s food security, people’s self-sufficiency and generating income. In 2006, a total of 35 irrigation infrastructure projects were completed.

Activities in the area of social infrastructure include construction, reconstruction and rehabilitation of roads, bridges, mini-hydroelectric generators, drinking water supply systems, schools and clinics.

Agricultural Diversification and Income Generation

Achieving food security for the people of Tajikistan is a principal focus of MSDSP’s agricultural activities, however, as people’s access to food has improved, there is an increasing focus on assisting people to use agriculture for income generation. MSDSP supports farmers with the production of an array of crops. This includes cereal, potatoes, vegetables and fruits. MSDSP is also supporting the establishment of businesses aimed at providing support to farmers through input provision and technical services. Diversifying agriculture is an important part of MSDSP’s activities. The objective is to introduce new crops that enable farmers to work on currently unusable or underutilised lands with low productivity, and to make additional income through the processing of their goods. The introduction of new crops and value added processing enables both farmers and local entrepreneurs to generate income from previously marginal and unusable land. In addition to producing crops for human consumption, the rearing of livestock along with feed and fodder production are also areas where the programme supports farmers. MSDSP is also involved in the rehabilitation of existing forests and creation of new ones. Forest projects are aimed at creating a sustainable supply of wood for fuel and construction materials.

Assessing Rural Incomes

Despite an annual GDP growth rate of 8 percent in both 2007 and 2008, Tajikistan has been adversely affected by the global economic crisis. According to the International Monetary Fund, annual GDP growth dropped to 3 percent in 2009, driven by a 30 percent drop in remittance inflows from labour migrants in Russia, as well as weak global demand for Tajikistan’s two main export commodities, cotton and aluminium.

In 2008, AKF/MSDSP conducted a household income survey as a follow-up to the 2003 baseline. The findings of the survey indicate the following:

  • While average household income in programme areas has increased by 75 percent, the gap between rich and poor has widened, and a large percentage of the population remains poor and only able to satisfy basic needs;
  • Income has shifted towards cash and non-agricultural sources. Remittances, salaries and pensions represent the main sources of cash income for households, making them vulnerable to external influences such as the global economic crisis as well as policy changes that affect migrant workers;
  • There have been decreases in crop self-sufficiency (i.e., the percentage of households able to grow enough staple crops to meet their minimum daily caloric requirements) and crop productivity (potato and wheat), particularly in GBAO and Khatlon. In all three regions, agricultural production remains at a subsistence level, with only about 10% of households selling what is produced. Main impediments to increased agricultural productivity include a lack of mineral fertiliser, water (whether irrigated or rain-fed) and land.

The survey also found that while almost all households had access to electricity during the summer, the situation was very different in the winter, particularly in GBAO, where only 51 percent of households had regular access to electricity.

Regarding access to financial services, while the percentage of households accessing credit in both Rasht and Khatlon increased, in GBAO there was a 14 percent decrease. The percentage of households with savings is low in all three regions, ranging from 5 percent of households in the Rasht Valley to 11.5 percent in the three Khatlon districts where MSDSP currently operates.

Facilitating Change

MSDSP has adapted its approach and programming to both foster and respond to changes in the country’s socio-economic context. It has supported a wide range of programming sectors beginning with community-based mobilisation, agricultural production and access to credit. More recently, it has expanded its activities to include a focus on infrastructure development, local governance, enterprise development and sustainable land management. Since 2008, MSDSP has shifted its focus away from direct implementation of activities to facilitating and strengthening local public, private and civil society partners to take on the functions it previously performed, to stimulate more lasting change.

Access to Finance

In late 2008, MSDSP received funding from the MasterCard Foundation to establish 2,500 community-based savings groups (CBSGs) throughout its programme area. CBSGs, composed of 10-30 self-selected individuals, provide access to basic financial services (savings and credit) for their members. CBSG members deposit savings which are pooled together and then lent out internally at a predefined, mutually agreed upon interest rate. At the end of a “cycle,” with each cycle lasting no longer than one year, the group “closes its books” and members’ savings, plus a proportionate amount of interest earned from the group’s internal lending, are returned. MSDSP’s role in CBSG formation is not to inject any capital into the group savings but rather to help build the social and financial capital necessary to ensure appropriate group functioning.

MSDSP has also established four Microlending Organizations (MLOs) to comply with the Tajik Government’s 2004 Law on Microfinance, which prohibits entities not registered as microfinance organisations from supplying credit. Prior to this law, VOs and SUDVOs had directly provided financial services to their members; these revolving funds have since been incorporated into specialised and professionally managed microfinance organisations, in which VOs and SUDVOs have an equity share.

Market Development

In its market systems approach to economic development, MSDSP places an emphasis on the role that can be played by Tajikistan’s emerging private sector in increasing rural incomes and employment opportunities. As a result, MSDSP has broadened its initial focus on individual producers and entrepreneurs to the market system as a whole, developing subsector value chains as well as the support services and rules, both formal and informal, which surround them. The emphasis has, therefore, been placed on strengthening the capacities of local service providers such as the Centres for Business Development Services (CBDSs), the Pamir Eco-cultural Tourism Association (PECTA) and De Pamiri Handicrafts to design and deliver demand-driven services to their respective constituencies. The subsectors that have been identified by MSDSP as having pro-poor growth potential include agricultural processing, seed crop production, community-based tourism and cross-border trade.

Natural Resource Management

Sustainable management of the natural resources that constitute the main sources of livelihoods in rural Tajikistan, such as land, water, forests, and pastures, remains a central concern for MSDSP. This concern has only deepened in light of the increasing importance given to building community resilience to climate change.

MSDSP works with the Pamir Biological Institute and other local and national research institutions (such as the National Centre of Renewable Energy) to develop and demonstrate innovative Natural Resource Management technologies. For example, the Pamir Biological Institute has established four demonstration plots (two of which are in Afghan Badakhshan) for revival of indigenous crop seeds and drought resistant crops. MSDSP also works with the University of Central Asia’s (UCA) School of Professional and Continuing Education to provide demand-driven training in effective natural resource management. Finally, linked to its work in local governance strengthening, MSDSP is in the process of facilitating VOs, SUDVOs, local research institutions and relevant local government departments to develop effective district level natural resource management plans.

For improvements in crop and livestock productivity, while MSDSP no longer provides extension services, credit, or agricultural inputs, it continues to play a proactive role in ensuring that these services can be accessed by farmers from other sources. For example, MSDSP is working with private input suppliers and farmer groups and associations to improve the local supply of quality fertiliser and seed.

Community Infrastructure

Community-based social and productive infrastructure remains a key priority for MSDSP, though it has gradually withdrawn from direct implementation of infrastructure projects to comply with new infrastructure legislation and its shift in role from service provider to facilitator.

Instead, MSDSP works with SUDVOs and local authorities to jointly select infrastructure projects among those proposed by VOs, identify local construction companies to implement the projects, and jointly monitor project implementation. As a result of this close collaboration, in an increasing number of instances, local authorities have contributed financially to project implementation and have accepted responsibility for the operation and maintenance of the infrastructure once constructed. MSDSP has also built community capacity to operate and maintain irrigation and drinking water infrastructure through the establishment of water user associations (WUAs). By December 2009, MSDSP had established 36 WUAs in GBAO, Rasht and Khatlon, servicing over 50,000 beneficiaries.

Cross-border Cooperation

In 2006, AKDN completed construction of a third bridge across the river Panj linking Afghanistan and Tajikistan. In the same year, MSDSP established a partnership with AKF Afghanistan to link border communities, strengthen economic ties and improve trust among the people. Currently, joint activities with AKF Afghanistan in NRM and Market Development extend to both sides of the GBAO/Afghan Badakhshan border; examples include the Pamir Biological Institute’s demonstration plots, agriculture and livestock extension services, and vocational training in high-demand trades.



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